Novell Under Pressure From Investors

UltimaGuy writes "The pressure is growing on Novell Inc's management to make major strategic changes after a regulatory filing revealed a Novell shareholder has joined Credit Suisse First Boston in calling for change at the identity management and Linux vendor. The steps proposed by the investment firm include cutting costs by targeting Novell's two corporate jets, its 'overstaffed' R&D department, legacy products, and its 400 NetWare engineers, as well as selling non-core businesses to enable funds to be redeployed."

Comments

While I can possibly see...

[cnelzie]

...cutting costs by eliminating Corporate Jet Expenses, a technology company shouldn't be cutting its R&D Department because some MBA Holding Investment Firm thinks it is overstaffed.

    Granted, if the firm discovered that 80% of the R&D staff isn't actually doing anything outside of playing QuakeIII or something, then yeah, they should be cut, a little...

Re:While I can possibly see...

[jmcmunn]

I completely agree. They are never going to release an innovative product for the future if they fire the engineers and cut R&D. Corporate jets, however, are simply not necessary in a world where anyone can be across the country on a commercial airline at the drop of a hat. They could even (gasp) fly coach to save money like the rest of us.

Why does it have to happen......

[amodm]

that investment firms and R&D don't go together well......

I know that not everyone in R&D is a brilliant scientist, but in the long run, its the R&D that helps the industry move forward

On a side note however, anything worthwhile coming out of Novell's R&D these days ?

Re:Overstaffed R&D

[Anonymous Coward]

That depends on whether you're looking at it from the perspective of a greedy money grabbing investor (share-holder value and all that), or someone who enjoys doing a job well.

"its 'overstaffed' R&D department?"

[starseeker]

I don't know about Novell, so perhaps they do have too many people, but I must say I'm rather alarmed the article mentions R&D being overstaffed and no other department. Most companies don't go all out hiring R&D folks to begin with - that's one of the things that makes Google so unusual - so they don't tend to be overstocked in R&D in the first place. I wonder if this fits in with the recent trend in corporate America to view R&D as a luxury and money sinkhole. Since the benefits don't show up next quarter, chop them off to look better in short term costs. Never mind five or ten years down the road when you need new products to stay competitive and don't have any.

Does ANYBODY in the US think long term anymore and still have influence in corporate or government circles? Maybe they're all thinking that if everybody else is also dumping R&D, everyone will still be competitive, and it will only be the consumer that gets stuck with static technology and gradually decreasing quality. (Price wars with no quality differential do that, since consumers tend to be bad in the short term at distinguishing good products from bad.)

Re:"its 'overstaffed' R&D department?"

[erroneus]

Current trends seem to indicate that R&D is best "procured" rather than done in-house. This can be accomplished in a variety of ways, but mostly, they just buy the small companies and individuals that make cool new stuff and call it their own. Kinda sucks how parasitic the corporate worlds have become.

Re:"its 'overstaffed' R&D department?"

[unother]

It's more pernicious than that, even, when looked at directly:

Company A slashes its research budget. Stock price rises in response.

Two researchers bootstrap a new research effort and eventually win venture capital. No longer in control of the enterprise due to the need for greater capital for their effort, it begins to bear fruit.

Company A comes back in, and "buys" the startup from the venture capitalists with their inflated stock.

As you can see, in this admittedly terse example, the financiers win in every sense of the word here. The researchers are forced into a fight-or-starve mode, and they do not get much overall benefit from their research. "On the books", however, it's a win-win scenario: for the original company, and the intermediary financiers (the VCs).

400 NetWare engineers??

[Spy Handler]

I don't suppose that means 400 CNEs.... they must be talking about 400 software engineers working on Netware.

Since they're proposing to cut 400 guys, that must mean that the actual Netware development team is some number larger than 400. Why so many guys are still working on a dead-end product with no future is beyond me.

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[account_deleted]

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Pirates ahoy

[FishandChips]

Ah, glad to see /. is keeping up with traditions as this one has been well covered on osnews.com for a day now.

I guess a few ghastly, greedy "investors" fronted by teenage analysts are now circling Novell, scenting blood and booty. My understanding is that Novell is nowhere near profitability and the gap between declining Netware revenue and new Linux revenue is alarming. But Novell does have quite a lot of cash in hand and is entangled with IBM via the SuSE acquisition. I'd guess some of the Wall Street greed merchants are hoping for a takeover or a dismemberment, with IBM being greenmailed into picking up a very large tab on the Linux side because losing SuSE would be too painful for them.

Of course, the little shits don't pitch it like that, just calling for better management.